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Businesses Canada The Courts

Amazon Just Got Slapped With a $1 Million Fine For Misleading Pricing (recode.net) 159

Some deals are too good to be true. And, for Amazon, they will cost the company. From a report on Recode: A Canadian enforcement agency announced today that Amazon Canada will pay a $1 million fine for what could be construed as misleading pricing practices. The investigation centered on the practice of Amazon displaying its prices compared to higher "list prices" -- suggested manufacturer prices (MSRPs) designed as marketing gimmicks to make people think they are getting a deal, even though it's often the case that no shopper ever pays that price. "The Bureau's investigation concluded that these claims created the impression that prices for items offered on www.amazon.ca were lower than prevailing market prices," Canada's Competition Bureau said in a statement. "The Bureau determined that Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate."
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Amazon Just Got Slapped With a $1 Million Fine For Misleading Pricing

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  • by rmdingler ( 1955220 ) on Thursday January 12, 2017 @09:12AM (#53653267) Journal
    Amazon is not alone [wcpo.com] in this practice. (beware the autoplayer)

    As long as people value the ephemeral bargain of the markdown, instead of the actual product value, this retail trick will never die.

    • by Mr D from 63 ( 3395377 ) on Thursday January 12, 2017 @09:24AM (#53653319)
      No doubt. They should go ahead and fine just about every retailer. This is something that consumers figured out a long time ago, Canada is just a little late.
      • by Anonymous Coward

        Exactly. I have family that sells furniture and the huge "50% off Sale!" sign that is painted on the front window is peeling from years of exposure to the elements.

      • by Anonymous Coward

        This is something that consumers figured out a long time ago

        Nope. It's still very, very effective. I have a particular family member who falls for it all the time.

        Another common strategy is that fake limited time. You see this pushed with almost product promoted on places like Warrior Forum, JVZoo, etc. (I loathe these websites, but it's that particular family member that falls prey to them.)

  • by Anonymous Coward

    as they made $1,000,001, it was worth it.

    Fines mean nothing if the fine isn't more than the company made from breaking the rules.

  • by XxtraLarGe ( 551297 ) on Thursday January 12, 2017 @09:15AM (#53653281) Journal

    Canada's Competition Bureau said in a statement. "The Bureau determined that Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate."

    If that's the price the suppliers are giving them, why wouldn't it be accurate? Nobody forces people to buy from Amazon, there's an entire world wide web out there where they can compare prices and make their own determinations. Heck, there are even sites that will do the comparisons for you. Likewise, nobody ever pays MSRP on anything anyway; this sounds like a bogus complaint to me.

    • Re: (Score:2, Troll)

      FTA:

      "The investigation centered on the practice of Amazon displaying its prices compared to higher "list prices" -- suggested manufacturer prices (MSRPs) designed as marketing gimmicks to make people think they are getting a deal, even though it's often the case that no shopper ever pays that price."

      “The Bureau’s investigation concluded that these claims created the impression that prices for items offered on www.amazon.ca were lower than prevailing market prices,”

      So false adverti
      • But why target Amazon for this first? Why not start with clothing stores that are much worse at this? Retail price of $200 for a shirt, on sale for $40 before 20% off and a $5 off 25 coupon. The only difference is that for 3 or 4 days out of the year, that shirt is really $200 (and nobody buys it).

        • Amazon is an enemy chosen to be an enemy by many governments. By getting around state sales tax laws, Amazon angered bureaucrats.
          • By getting around state sales tax laws, Amazon angered bureaucrats.

            They do this to a lesser extent than most online stores. They have warehouses in 24 states. Most online stores have one or two distribution centers across the country. As a result, Amazon collects sales tax for more states than most other online stores. Sure, they do a lot more revenue than a LOT of other companies, but they're not doing it in a significantly different way.

    • by msauve ( 701917 )
      If it's a supplier showing an inflated "MSRP", that's deliberately misleading - they're not the manufacturer and therefore it's not the MSRP. If the MSRP does come from the actual manufacturer, it's not misleading even if the typical retail sales price is lower. If it's "list price," or "suggested retail price," or some other generic term, it's basically meaningless and caveat emptor.

      It's not like someone shopping Amazon doesn't have Internet access. Canada's fining Amazon a million loonies because some p
      • Re: (Score:3, Informative)

        by Anonymous Coward

        Amazon.com prices in the USA are the lowest or close to it. Amazon.ca is nowhere close, and are often completely fantastical.

        Amazon.ca and Amazon.com are not very alike.

        In Canada, we have laws regarding what you can post as a 'regular' price, in that it must be related to a retailer's actual sales history. The 'regular' price cannot be fabricated from whole cloth. This is distinct from declaring a price to be 'recommended retail price' or MSRP.

        • by green1 ( 322787 )

          Amazon.com prices in the USA are the lowest or close to it. Amazon.ca is nowhere close, and are often completely fantastical.

          Exactly this. I'm sick of finding items on amazon.ca that are more than double the price of the same item on amazon.com (even after taking in to account the exchange rate), and finding the one on amazon.com won't ship to Canada. It's disgusting.
          I was just looking at an item online, $840 on Amazon.ca $320 on Amazon.com, identical item, same model number, everything. I found a different company that was willing to sell it to me in Canada for $450, not as good as the .com price, but way better than the .ca pri

    • by Nemyst ( 1383049 ) on Thursday January 12, 2017 @09:45AM (#53653451) Homepage
      Canada's Competition Act makes it illegal to display an "ordinary price" (i.e. undiscounted) that is not representative of the actual price you'd be paying most of the time. Basically, if that price is only shown for a short time (the product is on sale almost all the time at a different price) or that very very few sales happen at that price (because it's way too high), then it's not considered the ordinary price.

      Many many companies were guilty of that sort of stuff, so the regulation helps dealing with that. I know that as an American, you're not really used to consumer protection, but Canadian laws tend to favor the consumer a lot more.
      • by AthanasiusKircher ( 1333179 ) on Thursday January 12, 2017 @11:21AM (#53654049)

        Yeah, I'm actually a bit surprised that so many people here just casually dismiss the fact that most American companies are engaging in pervasive and systemic deception on a regular basis. For the cynical among us, I'm sure people think that's true a lot of the time -- but prices are a pretty fundamental fact displayed by sellers (possibly THE fundamental fact). A lot of people here, for example, tend to be dismissive of ads, which they feel are mostly misleading and deceptive. I've seen a lot of posts arguing for their complete eradication. But displaying "fake prices" is okay?

        Yes, it's common practice. Yes, it's not new. (I remember being shocked maybe 10-15 years ago when I went into a department store after probably not shopping in one for 5 years. And I couldn't believe how EVERYTHING was listed 50-70% off! I remember sales before that, sometimes exaggerating things, but it seems we took a turn somewhere in the past 20 years where this practice of inflating "retail price" became PERVASIVE.)

        But just because it's common doesn't mean it's a good thing. While we're at it, can we do away with claims of "now with 30% MORE!" on product packaging unless that claim is followed explicitly by "more than... X" where X is a detailed explanation of what actually has less and when it had it?

        • So I am assuming by your post that you are Canadian, and from what I have read above, it is still pervasive in Canada that retailers will hide a few of an item in a low traffic area at a jacked up price for 30 days so they can then advertise a sale that is not really a discount from what they would actually sell it at. So the only difference from the US and Canada is that you are regularly suckered into paying average or more on a "sale" that is not really a discount from the actual price and you THINK you

        • by Kergan ( 780543 )

          We monitored this a bit around Xmas last year. It wasn't so endemic, at least on the sites and products we were monitoring, except on Amazon:

          https://blog.scrapinghub.com/2... [scrapinghub.com]

    • Accuracy (Score:5, Insightful)

      by SeattleLawGuy ( 4561077 ) on Thursday January 12, 2017 @10:17AM (#53653623)

      If that's the price the suppliers are giving them, why wouldn't it be accurate? Nobody forces people to buy from Amazon, there's an entire world wide web out there where they can compare prices and make their own determinations. Heck, there are even sites that will do the comparisons for you. Likewise, nobody ever pays MSRP on anything anyway; this sounds like a bogus complaint to me.

      You are wrong. People rely on this information, which is why it is useful to do it. Amazon could and should easily show what the model normally sells for, but they only have an incentive to do it if forced to by regulation. Like how supermarkets should show price per unit even though anyone can do math if they take the time. In real life, you occasionally need regulation in order to incentivize behavior which is useful for society even though it hurts the person who does it. Otherwise you have lots of fraud, contracts are unenforceable, the economy becomes a whole lot less efficient, etc...

      A lot of government regulations are implemented badly, and some are bad ideas, and there are too many--but there are really good reasons for some government actions.

      • by plopez ( 54068 )

        Free Markets, or something approaching them, can only exist with careful regulation.

      • Amazon could and should easily show what the model normally sells for

        There is no "what the model normally sells for" on Amazon. Amazon prices are all over the place, all the time. If you don't like it you're always free to use a retailer that is or operates more like a brick and mortar store, or you can wait a week and get it for $10 less at Amazon.

      • by T.E.D. ( 34228 )

        Like how supermarkets should show price per unit even though anyone can do math if they take the time

        Ever actually tried that? That's when you'll notice that manufacturers also like to use completely different units from each other. I hope you've studied up recently on your imperial units. How many quarts are in a liter and/or a cup and/or a pint and/or a "fluid ounce".

        And that doesn't get into packaging differences. For instance, some dishwashing detergents use self contained pellets (marked as X pellets per bag), while others sell a big container of loose powder. Which is the better deal, per wash? Wel

    • If that's the price the suppliers are giving them, why wouldn't it be accurate?

      Because it is nothing more than a suggestion from the supplier. It has no actual relationship to real market value.

      Nobody forces people to buy from Amazon, there's an entire world wide web out there where they can compare prices and make their own determinations.

      So according to you fraud is ok because nobody *has* to buy from Amazon? Weird argument you have there. Sorry but retailers shouldn't get to make any and all claims about their product regardless of veracity. This includes lying about the "market" value of the product to make it seem like it is a better deal than it actually is.

      • So according to you fraud is ok because nobody *has* to buy from Amazon? Weird argument you have there. Sorry but retailers shouldn't get to make any and all claims about their product regardless of veracity. This includes lying about the "market" value of the product to make it seem like it is a better deal than it actually is.

        Fraud would be if they offered you a product for a certain price, then charged you a different price. Or charged you that price but sent you a different item. Or made a claim that a product had certain features but didn't. The market value of anything is whatever people are willing to pay for it. So it doesn't really matter if you claim that your product is ordinarily worth x; it only matters that you're selling it for y. Your argument boils down to "I think other people are stupid."

    • nobody ever pays MSRP on anything anyway;

      They've been gone for over 40 years, so maybe you're too young to remember "fair trade" laws. Companies were allowed to specify a minimum selling price for their products. Bose, for instance, set a minimum selling price on their stuff to give an impression of quality.

      More generally, will you refuse to buy a candy bar for $1.50 because that's the list price?

  • by Anonymous Coward

    Canada is a notoriously uncompetitive market. Gouging is the norm here.
    Take the U.S. Target retailer for example. They are a chain well known to Canadian border shoppers. They finally came in under the assumption that they could profit simply by having a Canadian presence, even though they offered inferior content at a premium over what Canadians could get across the border (even after currency and duties are considered).
    They failed miserably, and pulled out after big losses, but it speaks to the general mi

  • I'm all for protecting the consumer, but this sounds like that Canadian agency had a $1m budget deficit and they wanted to cover it fast. Sure, MSRPs are stupid and it would be nice to get rid of them, but how is the retailer supposed to know the manufacturer/supplier has them "inflated". Are they supposed to go all-Sherlock for each item they sell?

    • Re: (Score:2, Troll)

      Really? Amazon wouldn't know if those prices were accurate. A company that use analytics and big data to analyze the buying behaviors of it's customers and the pricing of products wouldn't know whether or not the MSRP is accurate or not. Troll somewhere else ass-hole.
    • by T.E.D. ( 34228 )

      this sounds like that Canadian agency had a $1m budget deficit and they wanted to cover it fast.

      That's not how bureaucracies work. More likely they had a $1m budget surplus they needed to get rid of, otherwise they'd get their budget cut in next year's allotment, and they figured paying lawyers to go up against Amazon's lawyers was just the money pit to do the job.

    • Then don't show it. You often end up paying more at Amazon.ca than at a brick and mortar yet the item is marked as 50% off at Amazon. It was clearly meant to be misleading.
    • by jopsen ( 885607 )

      but how is the retailer supposed to know the manufacturer/supplier has them "inflated". Are they supposed to go all-Sherlock for each item they sell?

      You want to claim that you are cheaper than marked price, then you need to do the research!
      You can't just make arbitrary claims like that without anything to back such a claim. That is misleading pricing.

      Honestly, there are so many common practices today that is fraudulent, if consumer protection agencies were to get aggressive about enforcing current regulation they have the power to change many things.
      Note: just because a fraudulent practice is both common and suspected by must customers doesn't make

    • by Nemyst ( 1383049 ) on Thursday January 12, 2017 @09:48AM (#53653471) Homepage
      They could just read the relevant sections of the Competition Act [competitionbureau.gc.ca]. The criteria used to determine an ordinary price are clearly stated there.
      • by Ecuador ( 740021 )

        Huh, that seems to indicate that all MSRPs, at least the way they work currently all over the world, are in violation. Are you telling me that, in Canada, unlike any other country I've been to, there is no such thing as silly MSRPs slapped on items when you go to stores or when you shop online? If that is so, I guess amazon.ca should be penalized.

        • by Anonymous Coward

          Yes, that's exactly how Canadian law works. The Manufacturer can suggest a price, but you will be fined millions of dollars for telling the customer what that price is. Granted, MSRP is generally a marketing gimmick, but it's very much a suppression of speech that would have pitchforks coming out here.

  • Wait..... (Score:2, Flamebait)

    by PortHaven ( 242123 )

    So brick and mortar stores do this ALL THE TIME.... they never cared. But Amazon does it. BAM!

    • Re: (Score:2, Flamebait)

      by PortHaven ( 242123 )

      I think if I was Amazon, I would mention this. And then also inform the agency that for ever dollar they are fined. They will put an equivalent fund in the pursuit of a lawsuit.

      • by green1 ( 322787 )

        "other people are breaking the law too" has never been a valid defence in any courtroom in the world.

    • Re:Wait..... (Score:5, Informative)

      by Mashiki ( 184564 ) <mashiki@gmail.cBALDWINom minus author> on Thursday January 12, 2017 @09:31AM (#53653375) Homepage

      So brick and mortar stores do this ALL THE TIME.... they never cared. But Amazon does it. BAM!

      This is also illegal in Canada and stores get fined for it as well up here. Maybe you're in the US, where consumer protections end where corporate rights start. Doesn't work that way up here though. It's the same reason why when you buy something on Steam in Canada, it's considered an owned product not a license.

      • So brick and mortar stores do this ALL THE TIME.... they never cared. But Amazon does it. BAM!

        This is also illegal in Canada and stores get fined for it as well up here. Maybe you're in the US, where consumer protections end where corporate rights start. Doesn't work that way up here though. It's the same reason why when you buy something on Steam in Canada, it's considered an owned product not a license.

        I get it, they try to operate in CA like they do in US. It's just not that big of a deal in the US because we're acclimated. In the same way that we all know that $4.99 is essentially $5 trying to look like $4.

    • by green1 ( 322787 )

      Canadian brick and mortar stores have a LOT of lobbying clout, and they HATE online merchants. Take a look at the argument over raising the amount you are allowed to import duty free. Lowest value in the developed world, by a HUGE margin, and no change in sight, all thanks to brick and mortar lobbying.

      Of course it's a Canadian tradition, why compete when you can lobby? That's why we pay much more for almost everything than most other countries (possible exception being Australia, they seem to get gouged alm

  • Car dealership sucker price yes some (dumb) people do pay that.

  • by 140Mandak262Jamuna ( 970587 ) on Thursday January 12, 2017 @09:35AM (#53653383) Journal
    For a company the size of Amazon, 1 million is nothing. It won't give a rat's ass. Not even a mosquito's ass. Not even a mosquito's fart.

    I

  • It will create a PrizeZone 65000 feet above the stratosphere. All prices will be moved up to the PrizeZone by Strato-Elevator, it is like the Space Elevator but goes only up to Stratosphere. There ion-engine powered semi-spacecraft robotic drones will move the prices beyond the stratrosphere. Super fast intelligent massless robotic agents will fetch the prices to the shoppers' access devices.

    Before the TechDirt revealed "intelligent massless robotic agents" is the new monicker for software, the market valu

  • I wonder how many millions in profit the made off the deceptive pricing?
  • Comment removed based on user account deletion
  • We are fining a company because we are protecting people so fucking stupid that they think and MSRP means something real.
    The problem with the world is that we keep insulating these people from their retarded decisions. Nothing good will come of dumbing the world down to the capability of the lowest common denominator.

    There are zero people in the world that we want to breed who were fooled by this. Zero!
  • I have never even seen jewelers sell their wares for less than 50% off anywhere in Canada... They always say it's a sale, but in fact, the sale price *is* their everyday price.
  • A sporting goods chain, Forzani's, was hit by a $1.7 million fine. In there also it mentions a clothing chain, Suzy Shier, being fined $1 million.
    http://infofranpro.wikidot.com... [wikidot.com]

    Sears was recently fined over tires.
    http://www.autoserviceworld.co... [autoserviceworld.com]

    Here's one more from Micheal's, an arts and crafts store, for $3.5 million!
    http://www.huffingtonpost.ca/2... [huffingtonpost.ca]

    Sears has previously been fined over pricing on other products but I can't find a source. In fact, many retailers seem to have issues related to advertise

  • The market doesn't give a flying fig about the rules you put in front of it. The market will always respond freely. Constrain it too much and "alternative" markets show up. The alternative market isn't really alternative, it is just freedom expressing itself.

  • I buy a lot of crap from Harbor Freight and most of it is worth not just every penny, but more than I paid for it. Not all of it, mind you, but most of it. Especially as Sears implodes, if you go anywhere else for hand tools, you're nuts. But they have taken to employing this practice themselves, and comparing their prices to some wholly invented competitor price. Sometimes they are actually comparing their junk to Snap-On tools, and then claiming you're saving the difference between their sale price, and t

  • Every manufacturer has to set a maximum MSRP to establish a market. Any discounts given by the manufacturer and retailers are sharing their profit with the consumers.,

    This seems like a case of a liberal government wanting to be the sole controller of taking and sharing of profits via taxation.

    • Manufacturers don't have to suggest a retail price. Retailers are perfectly capable of determining how much margin they want over the wholesale price, without reference to any standard price.

  • Wait, what? This has been standard practise in every retail industry for decades. Why is Amazon getting dumped with this fine? It's certainly a deceptive practise and needs to come to an end, but how can they single out one seller when their competitors have been doing it for so long? This is just absurd. They should have passed a new law outlawing the practise first. I would love to see something like it in the States as well. You can't just spontaneously decide that something is illegal that so man

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